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I really want to hear what the ato says about 2 and 3.
2. If gains in crypto value are realised and the ATO only accepts payment in AUD that forces the investor/trader to liquidate said asset to pay tax on such gains which doesn't sound right
3. Liquidating crypto assets to pay tax on prior crypto to crypto gains is in itself a second disposal event and would lead to further taxation as well as pushing the investor/trader's tax bracket when the said person has only receives said gains only once but it was taxed twice and hit his tax bracket twice.
It is not fair that we need to sell part of our investment to pay our tax bill. ATO wake up to yourselves!
By being forced to dispose of part of our investment to pay our tax bill you are reducing our future profits on the investment.
It is an investment for a reason. We are not realising a real profit until the crypto is converted back to AUD.
CGT should only be payable when crypto is converted back to AUD or used to purchase goods over 10K AUD.
Are you a crypto investor?
I will tell you why it is not feasible for me to sell B to pay my tax and buy back B with what remains.
I will change the example slightly.
ATO listen up!
I buy A in August 2017 for $10,000 which gives me (50,000 coins each coin being $0.20each)
In December 2017 I trade A now worth ($2.00 each 50,000 coins $100,000) for B ($1.25 each 80,000 coins $100,000)
Tax time comes and i need to pay my 50% CGT on my $90,000 profit being $45,000. I dont have this much in my aud bank account
so I must sell $45,000 worth of my crypto of B being 36,000 coins to pay my tax bill.
Now in August 2018 the value of coin B skyrockets to $100 per coin but i had to cash out ($45,000 worth being 36,000coins) becuase
i was forced to pay on a crypto to crypto trades instead of paying when i cash out to AUD or on purchases.
That 36,000 coins which i had to sell to pay my tax bill of $45,000 would now be worth 3.6 million dollars.
In cypro you are trying to increase your bag of coins, so if we are forced to sell our crypto at tax time, we are significantly reducing the coin count. It is an investment, we dont want to have to cash out the investment at tax time as it reduces future profits.We should only be paying CGT when we decide to cash out our investment in AUD or on purchase.
If you buy a house as an investment as it is going up in value over the next 10 years, would you sell half of your house
to pay your tax bill? No becuase in 10 years time that house is going to be worth much more.
We arent trying to avoid tax, i am completely ok with paying tax once i cash out to AUD or on purchases above 10K
But having to cash out part of our investment to pay the tax bill due to them making it crypto to crypto is not right!